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Edited Transcript of PRGX.OQ earnings conference call or presentation 27-Oct-20 9:00pm GMT

·29 min read

Q3 2020 PRGX Global Inc Earnings Call ATLANTA Oct 28, 2020 (Thomson StreetEvents) -- Edited Transcript of PRGX Global Inc earnings conference call or presentation Tuesday, October 27, 2020 at 9:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Kurt J. Abkemeier PRGX Global, Inc. - Executive VP, CFO, Principal Accounting Officer, Controller & Treasurer * Ronald E. Stewart PRGX Global, Inc. - President, CEO & Director ================================================================================ Conference Call Participants ================================================================================ * Alexander Peter Paris Barrington Research Associates, Inc., Research Division - Director of Research and Education & Business Services Analyst * Zachary Cummins B. Riley Securities, Inc., Research Division - Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2020 PRGX Global, Inc. Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions) I would now like to hand the conference over to your speaker, Mr. Kurt Abkemeier, Chief Financial Officer. Please go ahead, sir. -------------------------------------------------------------------------------- Kurt J. Abkemeier, PRGX Global, Inc. - Executive VP, CFO, Principal Accounting Officer, Controller & Treasurer [2] -------------------------------------------------------------------------------- Thank you, Sheri, and good afternoon to all of those on the call. Let us note at the outset that certain statements in this conference call may be considered forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act. These statements include statements relating to management's views with respect to future events and financial performance that are based on management's current expectations and beliefs and are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. For additional information on these factors, please refer to PRGX Global's filings with the Securities and Exchange Commission, including, but not limited to, its reports on Forms 10-K and 10-Q. PRGX undertakes no duty to update or revise any forward-looking statements, whether as a result of information, future events or otherwise. This presentation also contains references to certain non-GAAP financial measures such as EBIT, EBITDA and adjusted EBITDA, metrics that we use internally to measure our operating performance. A reconciliation between these non-GAAP measures and net income or loss to the most directly comparable GAAP measure is available at the Investor Relations portion of our website at prgx.com. I will now turn the call over to Ron. -------------------------------------------------------------------------------- Ronald E. Stewart, PRGX Global, Inc. - President, CEO & Director [3] -------------------------------------------------------------------------------- Kurt, thank you very much, and welcome to everyone on the call. Q3 was another great quarter, continuing to deliver on our promises of fiscal discipline, improved productivity and expanded operating leverage. We also achieved some important milestones, delivering our highest third quarter adjusted EBITDA in 7 years as well as our highest third quarter adjusted EBITDA margin as a percentage of revenue in over 10 years. With our Q3 results, we've exceeded analyst revenue and adjusted EBITDA expectations for 4 straight quarters, which demonstrates consistency in our business performance and fulfillment of our commitment to improve profitability and cash flow that we laid out for the Street over a year ago. Establishing a consistent track record of strong operating financial performance has been our primary objective as we work to deliver improved client and shareholder value. It's also significant to note that we accomplished these results during the COVID-19 global pandemic. So let me give you some -- a bit of overview for the quarter, a few notable highlights, which Kurt will discuss in greater detail in a few minutes. First of all, revenue came in at $41.5 million, 2.9% below the same period in 2019 on a currency-adjusted basis. The majority of this modest year-over-year decrease is related to our decision in 2019 to deprioritize the unprofitable parts of our Adjacent Services business in order to focus on profitability and free cash generation while building our scalable and high-performance technology infrastructure to enable our next-generation solutions and future revenue growth. We achieved $9.3 million of adjusted EBITDA, which was primarily driven by our focus on continued productivity enhancements over the last year, improving adjusted EBITDA margins dramatically during the past 12 months. We had net income of $3 million versus a net loss of $1.5 million for the same period last year, which demonstrates meaningful improvement in how we're offering the business. At the end of Q3, our net debt was $8.4 million, a 65% improvement over the past 12 months, bringing the net debt balance to the lowest level since Q4 of 2018. This improvement was achieved through our strong free cash flow generation, driven by improved operating performance and disciplined cash management. I want to commend Kurt and our senior leadership team for our solid performance in this area. As you can see, Q3 was an outstanding quarter for the company. And I want to recognize our outstanding employee teams around the world for once again delivering strong results in the midst of the challenging times we're experiencing. I am extremely proud of their dedication to serving our clients and maintaining productivity. So looking ahead, we feel good about our ability to continue delivering strong financial results while building and operationalizing our next-generation recovery audit, compliance and advanced analytics solutions. I'd like to now share 5 important points, which we believe will enable continued positive results. First, we have strong and sustainable client base. We exist to serve our clients around the world, and all our clients are dealing with the challenges of COVID-19. With over 75% of our revenues coming from clients providing essential goods and services, the majority of our clients have maintained or grown their revenues during this pandemic period, some by very significant levels. For the portion of our revenue coming from clients not primarily providing essential goods and services, we have seen minimal exposure to bankruptcy or sustained business interruption resulting from the global pandemic or otherwise. All of our clients are seeking increased EBITDA during this challenging time, so our services are broadly valued and appreciated. Looking ahead, we continue to work through the global pandemic. We have a high degree of confidence in both the continued financial health of our client base and ongoing demand for our services. Number two is the shift in consumer behavior to more online shopping. Of the many social and lifestyle changes associated with the global pandemic, consumer buying behavior has been one of the major areas of change in most countries. Rather than shopping in traditional bricks-and-mortar establishments, consumers have rapidly shifted more of their shopping to online channels. We've served many of the world's largest and most successful traditionally store-based retailers, and a large majority of these companies have benefited from expanding their online presence. Two of our large U.S.-based -- store-based retail clients recently reported double-digit same-store sales growth and triple-digit increase in their year-to-date online sales. We also served the largest pure e-retailing companies in the world. And so as it relates to the impact of the shift to more online shopping on our business, we audit all sales and merchandise transactions for our retail clients, including e-commerce. And many of these e-commerce transactions utilize the same supplier funding mechanisms as in-store deals. However, we are seeing a growing number of e-commerce-specific promotional funding mechanisms emerge, which opens up new claim types and new sources of recovery. Number three is our employees' ability to productively work from home. Since moving to a global work-from-home policy in March of this year, claims production and conversion statistics have consistently performed at or above prior year levels. This has been a relatively easy transition for us as much of our workforce has always been mobile and working from multiple locations, which in many cases includes home locations. We feel very good about our current work-from-home capabilities and see no issue in continuing these policies as long as necessary into the future. Number four, efficient cost structure with opportunities to improve margins in the future. Through intensive focus on productivity and cost improvement, we reached the highest third quarter adjusted EBITDA margin percentage in over 10 years. The business is operating at a very healthy and sustainable productivity level. And we are confident that we can maintain and improve this positive level of profitability going forward. There are several factors which have contributed to this improved level of efficiency, with technology playing an important and growing role. We are in the early stages of our Verigon Solution Suite rollout and expect to see further levels of productivity achieved as we further implement these solutions. And number five is our continued progress in development and rollout of our Verigon Solution Suite. We had spoken about the importance and significance of our Verigon Solution Suite on previous calls. As you may recall, this platform consists of 3 primary elements: the Epiphany high-performance data infrastructure, the Panoptic intelligent audit platform and the Lumen Advanced Analytics solutions. Epiphany is now fully implemented and processing all of our client data with impressive throughput and efficiency. Panoptic is currently being rolled out in our commercial recovery audit business, and we expect to complete development and begin rollouts for our retail recovery audit and contract compliance audits in early 2021. Finally, our initial Lumen Advanced Analytics solutions are operational and showing early results. We expect to expand the Lumen solutions in 2021 in a controlled and very profitable manner. So Verigon will be a key driver for our continued margin improvement and revenue growth for the future of our company. So lastly, before handing the call off to Kurt, I'm pleased to share with you that we are increasing our guidance for 2020 adjusted EBITDA to approximately $32 million. This is the second increase to guidance that we've made this year and I think a sign of our confidence in our ability to deliver this level of operating profitability for 2020. We look forward to delivering on this commitment for 2020 and to delivering consistent and improved operating performance in 2021. Now I'd like to turn the call over to Kurt to go over the strong results of the quarter in more detail. Kurt? -------------------------------------------------------------------------------- Kurt J. Abkemeier, PRGX Global, Inc. - Executive VP, CFO, Principal Accounting Officer, Controller & Treasurer [4] -------------------------------------------------------------------------------- Thank you, Ron. I'm pleased to report that the third quarter was our fourth straight quarter of strong performance, very strong and significantly improved adjusted EBITDA, solidly positive net income and earnings per share and improved cash flow generation, which I think is much more impressive considering the challenging business environment that companies face these days. So let's go into a little bit deeper into the quarterly results. Consolidated revenue was $41.5 million, a decrease of 1.8% from the third quarter of 2019 on an as-reported basis and a decrease of 2.9% on a constant dollar basis, adjusted for changes in foreign currency exchange rates. While this is a modest decrease in revenue of $758,000, I think it's important to note 2 points: one, that this decrease is significantly less than it has been over the last few quarters; and two, that the vast majority of the decline related to a pullback from the unprofitable parts of our Adjacent Services segment. We have experienced good stability in the retail part of our business, which highlights the resilience of our business model, especially amidst the COVID-19 pandemic operating environment. In this sort of environment, we believe the contingency fee-based nature of our business should be -- plays to our advantage as it poses no obligation to our clients other than to share their data with us, so we can find discrepancies that yield cash for our clients and revenue for PRGX. Of the $758,000 decline year-over-year, $645,000 was due to a decline in Adjacent Services and $113,000 of the decline was attributable to our core Recovery Audit business. The core Recovery Audit part of our business was effectively flat year-over-year. As for some color on quarterly revenue performance in the service lines and regions, Recovery Audit Americas decreased 6.5% year-over-year on an as-reported basis and 5.9% on a constant dollar basis. The retail part of the business was up modestly, while the commercial and contract compliance side experienced a decline. As we've noted before, the commercial as well as the contract compliance part of the business can be lumpy from time to time. And last year's quarter was a relatively stronger one, which made for a more challenging comp this year. Notably, one of our larger clients tends to have an every-other-year cycle, and 2020 is the off-cycle year. Overall, this part of the business continues to be developing as expected. Recovery Audit Europe, Asia Pacific increased 17.1% on an as-reported basis and by 10.4% on a constant dollar basis. The retail part of the business increased by double digits year-over-year on an as-reported basis, while the commercial part of the business was up significantly and has been the case for the last 3 quarters. As for the Adjacent Services, revenue was down $645,000 year-over-year. The decline was primarily due to the deemphasis on the project-based advisory part of our business, which was not producing the profitability we desired. Revenue from the more recurring revenue-based analytics and solutions part of our business grew year-over-year, and we're optimistic that we can scale this in a profitable but measured fashion as we ramp up our next-generation technology platform. As for adjusted EBITDA in the third quarter, it came in at $9.3 million compared to $5.6 million in the third quarter of 2019. And the adjusted EBITDA margin was 22.5% of revenue in the third quarter of 2020 versus 13.2% in the third quarter of 2019, an increase of over 900 bps year-over-year. This is due to the efforts of our entire team to deliver on our commitment to improve the efficiency and profitability, which we began since mid-2019. This is the fourth straight quarter of strong financial performance, reflecting the benefits of our efficiency initiatives. As Rob noted, this is our best third quarter adjusted EBITDA in 7 years, which is a follow-up to our 3 prior quarters that were similarly the best quarterly EBITDA results in a number of years. I hope it's clear to investors now that we are operating at a completely different level of profitability than we have in quite some time. The PRGX team has done a tremendous job in driving efficiencies and improving productivity. And I look forward to just not only sustaining the gains we've already made, but also building on this progress by driving further productivity enhancements in the future. Moving on to our discussion of net income. Net income for the third quarter of 2020 was $3 million or $0.13 per share, a significant improvement from a loss last year and was largely driven by the same factors impacting revenue and adjusted EBITDA performance. This is the second quarter in a row of positive net income since we embarked on the productivity initiative, and I'm very pleased to see the hard work of the entire PRGX team coming to fruition and delivering these results for investors. I think it's really important to point out that these are real economic earnings here, fully loaded, burdened with interest expense, a healthy income tax provision, amortization, et cetera. While we've typically focused on adjusted EBITDA as an important performance metric and we clearly had to address the improvement in that metric over the last year or so, you should expect us to discuss net income and earnings per share as also being a key performance metric going forward. We are committed to delivering true, sustainable and impressive economic earnings in the future. Moving on to the balance sheet. We ended the third quarter with $22.6 million in cash and cash equivalents and $31 million in gross debt, resulting in a net debt balance at the end of the quarter, defined as our total group's borrowings less cash balances, of $8.4 million, down from $15.9 million in the second quarter of 2020 and down from a peak of $24.9 million at the end of Q3 last year. Turning to capital expenditures. They were $2.7 million for the third quarter of 2020, down from $4 million in the third quarter of 2019. We're focused on the rollout and adoption of our new Audit foundation and platform, which we believe will be important in achieving further efficiency gains. We expect CapEx for 2020 to be down significantly from 2019 and expect to come in around $11 million. Turning to adjusted EBITDA guidance for 2020. We are increasing our guidance again to approximately $32 million. We are confident with this revised guidance based on our performance year-to-date and with our pipeline of claims for Q4 as it stands now. As you've heard from us over the last 2 quarters, despite a business environment in a COVID-19 world that tends to be challenging for many companies, we actually have experienced stable revenues due to the strength of our client base, in which over 75% of our revenue comes from clients who provide essential goods and services. As Ron noted earlier, this revised guidance would represent a 19% plus adjusted EBITDA margin for 2020, defined as adjusted EBITDA as a percent of revenue, an increase of more than 600 basis points compared to 13% in 2019 and an improvement of around 50% in adjusted EBITDA margin year-over-year. With respect to one of our strategic objectives of being the highest performing and most efficient recovery audit firm with the goal of achieving 20% plus adjusted EBITDA margins on an annual basis within the next 2 to 3 years, because we have made such progress during 2020, we believe we'll likely achieve the 20%-plus margin goal earlier than expected. Frankly, it's even possible that we achieve that goal this year, quite a bit ahead of schedule. We are working to reengineer both audit processes in the field as well as the information we use to manage our business and make resource allocation decisions. As we make progress with those sorts of reengineering efforts, we believe that we'll be able to further expand margins to continue to improve profitability and free cash flow. As you've heard from us recently, we have increased our focus on free cash flow generation, which we believe to be even more important than usual in this pandemic environment. The combination of expected 2020 adjusted EBITDA of approximately $32 million, less the combination of the following: CapEx of around $11 million, interest expense and income taxes of around $5 million and transformation-related expenses of around $3 million, should enable us to generate free cash flow near the mid-teens during 2020. Achieving this level of free cash flow in 2020 reflects an increase of more than 100% in our average annual free cash flow over the last 6 years. We believe this is one of the primary drivers of shareholder value in our business, and we intend to maintain our keen focus on free cash flow generation going forward. Before moving on to Q&A, I want to remind investors of the strategic priorities set out earlier this year and how we're tracking with them. The first objective is to be the highest performing and most efficient recovery audit firm in the industry. While I believe we've been the highest performing recovery audit firm from the perspective of our clients for quite a long time, as evidenced by our dominant position in the industry, what I think is becoming much more evident to investors is that we can be the most efficient recovery audit firm too. We believe the consistent delivery of these newly elevated levels of profitability year-in and year-out will be the proof of being the most efficient recovery audit firm. We will incessantly focus on productivity gains and to build on the progress that we've made over the last year. The second objective is to evolve our core business from a contingency, fee-oriented post-audit recovery provider to a prepayment, error prevention, subscription-oriented business partner to our clients in the future. While I believe it's clear that we've been delivering on the first strategic objective, we've been working very hard on the second one too. Many of the foundational elements to the strategic objective continued to go into place such that we believe this will position us advantageously in the future. By executing on these strategic objectives, we believe we'll be the -- we will best be able to drive shareholder value for our investors. So stay tuned. And with that, I'll turn it back over to Sheri for Q&A. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Our first question will come from Alex Paris with Barrington Research. -------------------------------------------------------------------------------- Alexander Peter Paris, Barrington Research Associates, Inc., Research Division - Director of Research and Education & Business Services Analyst [2] -------------------------------------------------------------------------------- Congratulations on a great quarter. -------------------------------------------------------------------------------- Ronald E. Stewart, PRGX Global, Inc. - President, CEO & Director [3] -------------------------------------------------------------------------------- Thanks, Alex. -------------------------------------------------------------------------------- Kurt J. Abkemeier, PRGX Global, Inc. - Executive VP, CFO, Principal Accounting Officer, Controller & Treasurer [4] -------------------------------------------------------------------------------- Thank, Alex. -------------------------------------------------------------------------------- Alexander Peter Paris, Barrington Research Associates, Inc., Research Division - Director of Research and Education & Business Services Analyst [5] -------------------------------------------------------------------------------- Not only a beat, but a raise, I like it. So let me just ask some big picture type of questions. First off, have you started to audit purchasing data that occurred during COVID yet? I think on the second quarter call, you said you were just beginning to see some of that data. And given that 75% of your customers are essential goods and services and given that they have maintained their revenue -- or in fact, have grown their revenue in many cases, I would think that you're going to have more claims opportunities and revenue opportunities in the back half of this year and into 2021. So the question is, have you started to do it? And what do you see? -------------------------------------------------------------------------------- Ronald E. Stewart, PRGX Global, Inc. - President, CEO & Director [6] -------------------------------------------------------------------------------- Sure. And we -- as you know, we -- the audit period behind the transaction is -- it varies from client to client. So we're on, I'll say, the front end of our more accelerated audits right now starting to get into those transactions. And I think the earlier part of the pandemic that -- we did see some reduction in the promotional investment coming from CPG companies and other types of promotional mechanisms. And -- but that's settled down. So that -- we had increased volumes, but we had some decrease in promotions. So those kind of balanced out. And what we're seeing now is that most of the promotional activity has gotten back to normal, and we're not seeing the extreme run on certain types of commodities like paper products that we saw before. And so we're hanging in there. We're not seeing it go through the roof, but we're also not seeing a decline either. It's trending in a positive direction. With regards to commercial where we would deal with manufacturing companies and CPG companies and pharmaceutical companies, again, we're seeing a higher level of spend, especially in the CPG companies. And we've seen some increase in claims for certain clients that we think could be due to the early stages of disruption in supply chain, that seems to be moderating and settling down. And we're also seeing clients that have a stronger interest in increasing the number of contracts that we review, wanting to make sure they're staying on top of their spend and staying close to compliance. So we're seeing positive activity there. But it's still early days for us. Because again, for most of our clients, we're 6 to 9 months plus after the transaction. So we'll probably have a much better view of that coming into the fourth quarter. -------------------------------------------------------------------------------- Alexander Peter Paris, Barrington Research Associates, Inc., Research Division - Director of Research and Education & Business Services Analyst [7] -------------------------------------------------------------------------------- Great. That's helpful in terms of existing business. How about new business in this environment, bringing on new clients? I would assume it'd have to be a challenge, but you have the contingency element to make it more attractive, I suppose. I think also on the second quarter conference call, you noted some hesitation on the part of new accounts to get started or they want smaller scope of services or anything. Has that kind of worked its way out? Or what are you seeing there? -------------------------------------------------------------------------------- Ronald E. Stewart, PRGX Global, Inc. - President, CEO & Director [8] -------------------------------------------------------------------------------- Well, we do not think that still exists, signing up new clients. But first of all, I've got to really commend our marketing and our sales team for making the adjustments they had to make going into the year. We just weren't sure how we were going to generate leads, and we knew we had to go through some different mechanisms to do that. But I've been very impressed. Our marketing team has been very resilient throughout this pandemic period with average monthly -- the business development team doing the lead generation activities are up 82% over 2019. And the average number of meetings that we're having per month is up a similar number over 2019. And then the number of new sales qualified opportunities is up 50% over last year. So we feel very good about our ability to utilize webinars and using other parts of publishing white papers and outreach calls to get people interested in what we do. And as we look at our bookings, we went through it again this morning, we're looking -- we feel very good that we're going to be able to -- we are starting it. When things started to go into the pandemic period, we were very concerned. So that is -- that's very positive. We've got some great logos coming in that we've booked. And the point you made about -- the question you had about bringing those clients online, they're still a little slow in terms of getting all the data required and getting all the teams aligned on what has to be done to get started. So we're a little bit behind. But again, we see that as coming through next year, maybe starting a little bit later. But we think we'll have good momentum going into the next year with that. But all in all, we've been super-pleased with how our marketing sales teams have been operating. -------------------------------------------------------------------------------- Operator [9] -------------------------------------------------------------------------------- Our next question will come from Zach Cummins from B. Riley Securities. -------------------------------------------------------------------------------- Zachary Cummins, B. Riley Securities, Inc., Research Division - Analyst [10] -------------------------------------------------------------------------------- Congrats again on the strong quarter. Nice to see the consistent execution throughout all of 2020. I guess, just following up on the bookings question, I mean, even though it's taking a little bit longer for some of these clients to kind of get off the ground and get started, are you thinking this business can potentially return to growth in 2021? Or kind of how are you thinking about that as you start to see the business exiting this year? -------------------------------------------------------------------------------- Ronald E. Stewart, PRGX Global, Inc. - President, CEO & Director [11] -------------------------------------------------------------------------------- Great question. We're looking at that right now in terms of what next year holds. But we've had to come through a lot this year from the -- putting the pause on some -- certain elements of adjusted EBITDA, the slow start up of some of these new clients. And no question, we've had some decline in revenue this year year-over-year. But we think we are hitting a pivot point here and that we're starting to see things kind of get to a new level of what I'll say a normalized direction. And what we're really working on is, first of all, we feel very, very positive about where we are in our operating performance and our financial delivery, EBITDA, free cash flow, net income, all super-positive. And we're absolutely committed to continuing that going forward. This is a great position to be in and really gives us strength to do a lot of things going forward. Secondly, we're continuing to get -- are continuing to work through the development and the rollout of the Verigon Solution Suite. That is a key part of our continued work on efficiency as well as how we're going to grow revenues going forward, both in terms of our recovery audit, delivery as well as other solutions through our advanced analytics. So that's super-important. And we've got a lot of focus going there next year. In terms of growth, we've had, as you know, headwinds in 2019. We'll get some of those behind us. We're going through the process right now of looking at next year. We think there are some really favorable things happening, some other things that we're still sorting through. But we feel good about our ability to at least get to flat revenues with some level of incremental growth. We'd like to do more, but surely don't want to overcommit. We're going through that process right now of planning next year and looking at what it looks like. We've also got some of the unknowns of COVID and the extension of that. So there are many factors that are going in. But we feel like we're at a pivot point and start to go in -- back up to the -- in the right direction on revenues. We'll give you a lot better color on that next quarter after we get a little further into our planning process. -------------------------------------------------------------------------------- Zachary Cummins, B. Riley Securities, Inc., Research Division - Analyst [12] -------------------------------------------------------------------------------- Got it. That's helpful. And in terms of gross margin, I think, really strong once again here in the quarter. I mean what do you view as a sustainable level of gross margin as we continue to go forward from here? It sounds like there's even room for improvement as you start to really roll out more of this Verigon technology platform. -------------------------------------------------------------------------------- Ronald E. Stewart, PRGX Global, Inc. - President, CEO & Director [13] -------------------------------------------------------------------------------- Yes. Kurt, do you want to give him some view on continued... -------------------------------------------------------------------------------- Kurt J. Abkemeier, PRGX Global, Inc. - Executive VP, CFO, Principal Accounting Officer, Controller & Treasurer [14] -------------------------------------------------------------------------------- Yes. As we've stated in the past, we think that over the longer term, we can get kind of solidly into the mid-20% adjusted EBITDA margin kind of territory. And some of that's going to be gained through efficiencies at the cost of revenue line, some through SG&A. So I might encourage you to think of both of those together. And maybe half of it is going to come from core and will hit gross margin, and the other half SG&A. But we definitely believe that with the infusion of technology into our processes, that just enables us to find more with the same level of resources that we have today. -------------------------------------------------------------------------------- Zachary Cummins, B. Riley Securities, Inc., Research Division - Analyst [15] -------------------------------------------------------------------------------- Understood. That's helpful. And then, I guess, just looking at the adjusted EBITDA number, I mean for the implied Q4 range, I think it's slightly down year-over-year. I just want to make sure, are there any costs that need to be caught up in Q4? Or exactly how you're thinking about the final quarter of 2020? -------------------------------------------------------------------------------- Kurt J. Abkemeier, PRGX Global, Inc. - Executive VP, CFO, Principal Accounting Officer, Controller & Treasurer [16] -------------------------------------------------------------------------------- Yes. Well, keep in mind that approximately $32 million, that's kind of an implied range there. Would we expect something that's kind of similar to last year? Yes. 2019 was a little bit different than 2020, in that we really underperformed and there were things like bonus accruals that were relatively low last year. Whereas this year, it's been pretty high, because we've been very profitable and have cut a lot of costs out that I would expect we would have even heavier accruals in Q4 of '20 versus '19. That if you were to adjust out for that, I would feel pretty comfortable that we would be outperforming last year. So it's a little bit of those kinds of headwinds. They are the good kind of headwinds. It's because we're successful that we have those kinds of bonus accruals. And it's important if you want to have an employee base that's energized and engaged and getting rewarded for the strong performance. So probably flattish compared to last year. But keep in mind that last year was also -- that was our first time that we really had strong quarterly performance after having taken out so much of the cost with our efficiency initiative. -------------------------------------------------------------------------------- Operator [17] -------------------------------------------------------------------------------- And speakers, I'm showing no further questions in the queue at this time. I would like to turn the call back over to you for any further remarks. -------------------------------------------------------------------------------- Ronald E. Stewart, PRGX Global, Inc. - President, CEO & Director [18] -------------------------------------------------------------------------------- Thank you very much, operator, and thanks to all of you for joining us today for our Q3 earnings call. We are working hard on wrapping up this year. We've got plenty of work ahead of us between now and the end of the year. So we're looking forward to a great Q4, and we'll look forward to having you on our next quarterly earnings call in early 2021. Thanks a lot, and everyone, take care and stay safe. -------------------------------------------------------------------------------- Operator [19] -------------------------------------------------------------------------------- Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.